Bank Merger Plans and Simulations

The plan I: Overall Merger High-Level Plan

The Situation

According to the case outlined by Jick and Peiperl (2011), Southern Bank agreed to merge with the Northern Bank to offer better services to the customers and effectively curb competition from the Eastern Bank. The merger required the approval of the shareholders, especially those who had a stake in the Southern Bank. While the management of the Southern Bank seemed to have welcomed the merge, the employees were, however, worried about the possibility of losing their jobs even though the management promised them to do all it could to help them get new jobs at the Northern Bank.

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Consequently, Chris was requested by the management to spearhead the integration of Southern Bank’s operations into the Northern Bank (Jick & Peiperl, 2011). He was to take charge of the whole integration process and he was expected to ensure the smooth running of the whole process. By the time the deal was done, Chris’s team had been expected to give the management a clear finalized plan on how the integration process was bound to take place.

To aid him in coming up with the plan, Chris was provided with all the relevant details including profiles of the two banks and details of the merger deal (Jick & Peiperl, 2011). He was also provided with information on the people he was to deal with so that he could make appropriate preparations for future meetings. The CEO reiterated the importance of this integration process as a prerequisite for protecting and growing their revenue base, just to warn Chris that there was absolutely no room for failure (Jick and Peiperl, 2011). The Southern Bank had even gone ahead to notify their clients, i.e. other banks and companies, about the forthcoming changes encouraging them to work with the Northern Bank once the deal is sealed.

What is changing?

Jick and Peiperl (2011) outline several changes taking place in the Merger Plan Simulation case. First, the Northern Bank is buying off the Southern Bank hence there will be a consolidation of their services. The CEO feels that this will take care of the competition coming from the Eastern Bank as it will be easy to improve one bank as compared to two. Second, there will be a change in the management, because not everyone in management will find a managerial position once the two banks are merged. Some of the managers will have to be laid off or given lower positions. This will either happen through a consensus or there can be elections for the new positions.

There is still the possibility of having new staff in the management positions to avoid internal wrangles. Third, the shareholders will also experience some changes. Those affiliated with the Southern Bank will have to decide whether to cross over to the Northern Bank or sell their shares. For those who will decide to cross over, there will be the possibility of their share value increasing as integrating the two banks could make the new bank better compared to their competitors.

Fourth, the Northern Bank will have to increase its physical size, because the loyal customers of the Southern Bank will move to the Northern Bank. Besides, the Northern Bank may be forced to absorb the employees of the Southern Bank. Finally, there will be a change in the relationship between Southern Bank and its customers. The customers may terminate their relationships or decide to work with the Northern Bank. Terminating their relationships might harm the income of the Northern Bank.

The Impacted Stakeholder Groups and the Level of Impact for Each

Jick and Peiperl (2011) also outline several stakeholders that will be affected by this merger. First, the value of shares may either go up, if the integration bears positive results, or down, if the customers terminate their relationship with the two banks following the merger decision, hence highly affecting the shareholders. Second, not all employees of the Southern Bank will get jobs at the Northern Bank.

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The merger will mean unemployment for some of them. There will also be role changing as the Northern Bank tries to adopt the change hence highly affecting its employees. Third, not everyone in the management will get a managerial position when the banks merge. Besides, there will be a role changing at the management level due to a large number of customers and activities that will be brought together. Fourth, merging the two banks may make the Northern Bank a strong competitor, hence averagely affecting other competitors.

However, the plan could also backfire and give the other banks a competitive advantage over the Northern Bank. Last, the customers and the general public will be least affected since it is not a must for them to seek the services of the Northern Bank. The change might not even affect them at all as they would simply seek services from other banks or remain at the Northern Bank, not caring about the change after all.

Strategies and Tactics to Help Stakeholders Adopt the Change

At the individual level, I recommend the following methods for adopting change. Individuals should, first of all, accept the natural feeling that the change brings. If it makes them sad, then let them mourn and let out all the feelings, but tolerate ambiguity at the same time (Jick & Peiperl (2011). They should, however, manage the stress that comes with the change. This can be done by maintaining physical wellbeing, seeking information about the change, taking regular breaks, and seeking support as advised by Jick and Peiperl (2011). Finally, individuals should exercise responsibility. Jick and Peiperl state that exercising responsibility involves identifying options and gains, learning from the losses, participating in the change, documenting strengths, and learning new skills, especially for those who are affected by the change.

At the managerial level, I would recommend the following tactics to help them adopt change. Managers, especially those who are likely to lose their positions since not all managers will get a position at the Northern Bank, should be encouraged to rethink resistance. There is a need to find a way of ensuring that they do not resist change as a way of protecting themselves. Managers should also be made to understand that they need to be stronger than their juniors and that they should offer emotional first aid to employees who are highly affected (Jick & Peiperl, 2011).

They should help the employees to accept change by listening and providing safety resources and support to the affected employees. Jick & Peiperl (2011) add that managers should ensure that the change is necessary, safe, and yields good results by continuing safety nets, suspending judgment, encouraging teamwork, and involving people in decision making.

Plan II: Plan for Two of the Ten Merger Decision Items

The Situation

Since the Northern Bank has decided to buy the Southern Bank and integrate the two banks, some things are bound to change. Almost all the processes and ways of doing business will change. In this section, I will look at the human resource practices and the IT systems.

Three possibilities are likely to happen to the IT systems of the Southern bank according to Jick and Peiperl (2011). First, IT systems of the Southern Bank could be retained and run autonomously, complementing those of the Northern Bank. In this plan, it will be as though there was no integration in the first place, as there is no change in the IT systems of any of the two banks. The second scenario involves linking the two IT systems.

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The systems could be merged into one IT network in a way that one cannot tell what belonged were at the end of the day. All the information and work of the two banks will be combined into one unit. The third option is a total replacement of the Southern Bank IT system with that of the Northern Bank. Nothing will be adopted from the Southern Bank, and the bank will have to change its way of doing things about the IT systems and completely adopt those of the Northern Bank.

In the case presented by Jick and Peiperl (2011), merging the systems is the best option because there is so much information on the IT systems of both banks. Doing away with one will be a mistake as so much information, which could be useful for the development, growth, and good service delivery of the banks could be lost. Having both systems work side by side will not be a very good idea too, as this could lead to confusion in the process.

The two banks are now becoming one. It might not yield any positive result to have two systems running. There will be so much mess at some point, which may lead to the collapse of the bank. Therefore, linking is the best step to take. No information will be lost and there will be no confusion as well. The two systems will both merge to form one strong IT system with plenty of useful information.

Just like IT systems, human resource practices also have two possibilities for change according to Jick and Peiperl (2011). The new bank can either adopt a retention plan in which the Southern Bank employees continue to do things their way, while those of the Northern Bank also do the same, or a replacement option in which the Southern Bank human resource practices will be completely forgotten and they will have to adopt the Northern Bank human resource practices.

In this case study, replacement is the best way to go, because when it comes to human behavior, you can only choose one path. There is no way someone can behave in two different ways under similar circumstances, in this case, the work environment.

What is changing?

The integration of the two banks is a change in itself, which brings about many other inevitable changes. Foremost, there will be a change in human resource practices. If the two banks decide to choose a retaining plan, then there will be two practices being followed at the same time and in the same place, unlike before when it was one practice at one place. Everyone will have to adopt this change, but it can be a bit confusing when people have to do things differently while the goal is the same. If the banks choose the replacement plan, those whose practices will be replaced will experience the change. They will have to completely forget their way of doing things and learn the new way.

Furthermore, there will be three types of possible changes in IT systems. First, there will be a replacement meaning that the Southern Bank systems are completely done away with and they adopt the Northern Bank’s systems. Employees from the Southern Bank will experience the change and they might be forced to take lessons from the Northern Bank on how the systems work. This could take a while, but they will have to adopt the change finally.

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Second, the banks might decide to retain the IT systems of the Southern bank. Two systems working at the same time and place to achieve the same results is quite a change. It might be confusing and hectic before the people in charge completely adopt this. Finally, the management might decide to link the IT systems of the two banks. This means that the two systems merge to become one. The new system will be new and complicated, which is a change that will be experienced. Those who will not be able to cope with it, will most probably get laid off and give way to those who are more flexible to change.

The Impacted Stakeholder Groups and the Level of Impact for Each

Jick and Peiperl (2011) outline several parties that would be affected by the operational changes as discussed below.

First, the shareholders will be highly affected by these changes. Whether the banks decide to retain or replace their human resource practices, the consequences will be felt by the shareholders. In this case, I would assume that retaining is the better option because all the positive consequences of both practices will be retained hence strengthening the human resource base. Consequently, the bank will be a better institution and the share value will go up to the advantage of the shareholders.

Second, employees will be highly affected as they will have to, in one way or another, deal with different human resource practices. In the case that there is retained, they will have colleagues who behave differently from them. If there is a replacement, those whose practices are replaced will have to learn new practices. I assume that the bank will adopt retaining to retain all the positive practices in each bank and hence have a stronger workforce.

Third, the management will be highly affected. New IT systems and human resource practices will affect the way of managing the business. This is because you cannot govern something new with old rules. They will have to tailor rules that favor new things. Therefore, the management will have to be restructured to accommodate the changes that are introduced into the company.

Fourth, the customers and the general public will be least affected. The operations of the human resources and IT systems are the least of their concern as long as they receive quality services. Many people do not mind how a bank works as long as it can satisfy their needs.

Last, competitors will be averagely affected. Assuming that the bank retains human resource practices and links the IT systems, then it would work better. Consequently, the bank would do better than its competitors. This means that the new bank will, most likely, dominate the market forcing the competitors to up their game, and hence competition will be stiff. Stiff competition will call for high-quality services to remain on top of the game.

Strategies and Tactics to Help Stakeholders Adopt the Change

Borrowing from Jick and Peiperl (2011), I would recommend the following methods of adopting change at the individual level. They should first of all accept the natural feeling that the change of different human resource practices and IT systems would bring. Let them express their feelings in the best way they can so that they can let it out and move on with the change. Also, individuals should manage the stress that comes with the change of human resource practices and IT systems. This can be done by maintaining physical wellbeing, seeking information about the change, taking regular breaks, and seeking support.

This can be done during free time and employees can practice what they have learned when they get back to work later on. Individuals should also exercise responsibility. Employees should adhere to work etiquette even as they handle change. For example, those who are in the IT department should ensure that the system works the way the management wants it to work. They should not try to manipulate the system simply because other people do not understand the new technology. Exercising responsibility would involve identifying options and gains, learning from the losses, participating in the change, documenting strengths, and learning new skills as outlined by Jick and Peiperl (2011).

At the management level, I would recommend the following tactics to help managers adopt the change. Managers, especially those who are likely to lose their positions since not all managers will get a position at the Northern Bank, should be encouraged to rethink resistance. Instead, they should make sure that there is a smooth transition of the change and it is fully implemented (Jick & Peiperl, 2011).

Managers should also be encouraged to ensure that all employees embrace work etiquette and that the IT system selected is put in place as soon as possible. Managers should also understand that they need to be stronger than their juniors, who will be equally affected by the changes in IT systems and human resource practices, and that they should offer psychological first aid where necessary.

They should help the employees to embrace change by listening to them and providing safety resources and support to the affected (Jick & Peiperl, 2011). Managers should also ensure that the change in human resource practices and IT systems is necessary, safe, and yields good results by continuing safety nets, suspending judgment, encouraging teamwork, and involving people in decision making, especially if they are not sure about how the change will turn out, as advised by Jick and Peiperl (2011).

Reference

Jick, T. & Peiperl, M. (2011). Managing change: Cases and concepts (3rd ed.). New York: McGraw Hill Ryerson.

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